Green but not much grass!
Dairy farmers in the lower North Island are working on protecting next season, according to Federated Farmers dairy chair Richard McIntyre, who farms just north of the Horowhenua township of Levin.
"While the monetary value is modest at around $24.15 million the message it sends is powerful," says Willy Leferink, Federated Farmers Dairy chairperson.
"As a cooperative, FrieslandCampina's revenues are similar to Fonterra's. You could describe the investment in Synlait as a 'toe-dipping' exercise but clearly there is an underlying desire to get exposure to New Zealand liquid milk.
"FrieslandCampina easily has the financial means to acquire more of Synlait later if it so chooses. Its cornerstone shareholding is to us more like a beachhead.
"It is also significant that even after the public float, Holland's FrieslandCampina will have a strong shareholding alongside Bright Dairy and Food Co of China and Mitsui & Co of Japan. The prize is clearly Asia.
"While other investors have not meant much to Kiwi dairy farmers, FrieslandCampina most certainly will.
"Having one of Europe's largest cooperatives enter our market, albeit through a commercial shareholding, may just spark a discussion over how the domestic cooperatives will respond; Fonterra especially.
"While the focus of the last Dairy Industry Restructuring Act (DIRA) review was on Fonterra's financial redemption risk, Federated Farmers was concerned at the potential for supplier loss.
"Fonterra's current model is that all suppliers, save for some, either have three seasons to 'share-up' or go onto contract milk. Even with contract milk, you have to agree to share-up with Fonterra within six-years.
"Sharing-up in Fonterra is currently done by buying those bank unfriendly highly priced shares. To us there has to be a change here.
"What is for certain, things have become very interesting in the dairy industry," Leferink says.
